Forward Ltd$.$ has provided you with the following set of projection assumptions:

Forward Ltd$.$

Last Year

Year $1($Projection$)$

Year $2($Projection$)$

Year $3($Projection$)$

Sales

$$4,600,000$

$$4,876,000$

$$5,266,000$

$$5,687,400$

Sales growth

$4\%$

$6\%$

$8\%$

$8\%$

Gross profit margin

$41\%$

$46\%$

$47\%$

$49\%$

Accounts receivable days

$48$

$38$

$34$

$30$

Accounts payable days

$21$

$26$

$30$

$30$

Inventory days

$61$

$60$

$60$

$60$

Net capex

$$100,000$

$$10,000$

$$10,000$

$$5,000$

In your review of the assumptions, you are concerned about Future$$s ability to achieve the projected level of sales, and consider similar growth to the prior year would be more realistic. If sales only grew by $4\%,$ but all other assumptions proved correct, what would the likely impact on cash flow be in year $1?$

Cash flow would likely reduce because sales would be $2\%$ lower than expected.

Cash flow would not be affected because the sales are credit sales, not cash sales.

Overall, cash flow would be lower than originally projected, but still increase compared to the prior year.